Question

Given the following information:

Petty cash fund $ 175

Postage stamps    58

Cash on hand 4,265

Traveler's checks    550

Checking balance, First National Bank    30,425

Checking balance, Third National Bank (825)

The total amount of cash that should appear on the balance sheet is?

Answer 1

Compute total amount of cash appearing in balance sheet as follows: (Petty cash fund + Cash on hand + Traveler checks + Cash = Checking balance, First national bank + Checking balance,Third national bank = $ 175 +$ 4,265 +$ 550 + $ 30,425 - $ 825 = $ 34,590 Thus, total cash balance is $ 34,590. Note: Postage stamps are non-cash and cash equivalent items and are not readily convertible into cash. These are reported as other investments and securities in the balance sheet. When there us negative balance in checking account (a nominal account), it needs to be paid immediately and thus, is adjusted from the positive balance of other checking accounts.